To look at any advertisement for "Elf" is to suspect what isn't true -- that the movie is one joke hammered into the ground, that it exhausts itself after 15 minutes and then bludgeons the audience for an hour more, before finally releasing into some canned ending, with lots of false sentiment and jingling Christmas bells. There have been such movies. "Elf" isn't one of them.

Instead, "Elf" is funny and intelligently made, a film for kids and adults that's both sweet and sardonic. It takes the clash between the world as we know it and the world as it exists in Christmas stories and exploits that contrast to expert comic effect. Then it does something even more difficult -- it comes in for a landing without banking too hard either in the direction of cynicism or sentiment. "Elf" stays perfectly in balance, a pleasure throughout.

Will Ferrell plays the dementedly cheerful Buddy, a human being who, through a mishap, was brought up as an elf at Santa's North Pole toy factory. The first minutes make good use of the sight gag of Buddy, who is huge and has no idea he doesn't belong, coping with tiny elf beds, chairs and toilets. "Elf" is a comedy of incongruity, but Buddy's physical incongruity in elfland is nothing compared with the psychological incongruity of Buddy in New York City. That's where screenwriter David Berenbaum and director Jon Favreau hit the comic mother lode.

See, Buddy finds out that he is not originally from the North Pole. He's from New York, and so he travels there, looking for a father who doesn't know he exists. The casting of the father couldn't be more ideal -- James Caan, who's not at all known as a comic actor and therefore not as cuddly as, say, fellow tough-guy Robert De Niro. He plays a grasping, hard-nosed publishing executive, and he seems like exactly that, not an exaggerated version, but the real thing.

It's the key to the movie -- the way Favreau directs Caan. Favreau has the veteran actor play it straight, and the result is that his sourness becomes a superb counterpoint to Ferrell's good cheer. I've been laughing for days at the way Caan, as Buddy's father, prepares his wife (Mary Steenburgen) for her first meeting with Buddy. His face is a mask of weariness and disgust. He just can't believe what a terrible day he's having. He grumbles, "He thinks he's an elf."

Previous to this movie, Favreau wrote the romantic comedy "Swingers" and wrote and directed the mob comedy, "Made." "Elf" shows that he can make a film ostensibly outside his swinging urban milieu and from another writer's script and yet still have it come out sounding like a Jon Favreau movie. There's a satiric sensibility and an affection for extreme choices here that feel like a comedic signature: When Buddy finds out that he's not an elf, he runs stumbling and weeping through the snow like Jane Wyman in a '50s melodrama.

Favreau's achievement should in no way take credit away from Berenbaum, whose screenplay devises a series of irresistible situations. Just one example:

When Buddy finds out that "Santa" is coming to Gimbels, he assumes it will be the real Santa (Edward Asner), not a helper. So the audience spends minutes looking forward to Buddy's explosion when he finds out that the Gimbels Santa is an impostor.

As Buddy, Ferrell plays a happy idiot with heroic intensity and variety. Buddy is as uncontainable as a 6-year-old. It's a terrific comic performance, completely invested, physically energetic and utterly relentless.